Save Article

Coming Soon: More Bubbles

By

John Shipman

Nov 10, 2009 3:20 pm ET

There’s no way, after the last two monthly employment reports, “that the Fed is going to consider exiting emergency measures in the months and probably quarters to come,” says Frank Veneroso of Veneroso Associates. “Hence, it is rational to expect more asset market bubbleization,” he says. “But continued significant declines in employment and income are not good for the economy. And, even in the bubble era, the economy does still matter for stocks.” If household incomes are falling in nominal terms as a result of declines in hours worked and no growth in hourly compensation, “the ability of households to service debt will suffer.” Expect to see “ever higher rates of household loan delinquency and default.”